Fitch lifts FY26 growth forecast to 7.4% on stronger consumer demand
- IBEF
- December 8, 2025
According to Fitch Ratings most recent Global Economic Outlook, India has revised its economic forecast for FY26 upwards from 6.9% to 7.4%. The company attributes this increase primarily to strong private consumption and improved consumer sentiment, both of which resulted from the implementation of the Goods and Services Tax (GST) reforms. According to Fitch, Private Consumer Spending is expected to be the primary driver of growth in FY26, with a positive impact from rising real incomes and improved consumer confidence. This increase in the growth rate follows India's GDP growing at an annualised rate of 8.2% during the July-September quarter (Q2). This is the fastest growth rate seen in 6 quarters and was higher than both market and government forecasts. Additionally, Fitch's most recent report indicates a substantial narrowing between nominal and real GDP, with the GDP Deflator rising only 0.5% year over year.
With inflation declining and further possible rate cuts from the Reserve Bank of India (RBI), the Agency expects the RBI to reduce its key policy benchmark rate to 5.25% in December, thus accumulating a total of 100 basis points in projected rate cuts in 2025. Despite recent fluctuations in the rupee's value, it is expected to stabilize and appreciate against the dollar, reaching approximately 87 per dollar by the end of 2026; the rupee is also expected to remain stable throughout the remainder of FY27.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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